Kenmore European Industrial Fund Limited - Hemscott IR

4 Kenmore European Industrial Fund Limited Report and Accounts 2007
Report of the Directors
Principal Risks and Uncertainties
The Company invests in real estate in Europe and
Scandinavia. It is therefore exposed to variations in market
conditions for such assets and to responses to market
conditions, to local and national economic conditions,
changes to the currency and interest rate profiles, tax rates
and other future events. In addition the Company will also
face risks from breach of laws or regulations, poor selection
of assets, failure of systems or procedures in any of the
countries in which the Company operates, and actions
leading to central management and control of the assets
being regarded as taxable in the UK.
The Investment Manager, through its active management and
review processes, will seek to minimise these risks wherever
possible, and the Board, through its review of the Investment
Manager’s work, will seek to identify any additional
exposures.
The Board uses a number of key performance indicators
to assist in measuring the performance of the Company.
These are the:
• running yield on the portfolio;
• cost of the Company’s debt;
• performance of the share price and its relativity
to NAV per share excluding deferred tax; and
• dividend yield.
Internal Controls
The Board is responsible for the Company’s system of
internal control and for reviewing its effectiveness, consistent
with the guidance issued by the Financial Reporting Council
in October 2005. The process is based principally on the
Investment Manager’s approach to internal control.
At its meetings the Board reviews a report from the
Investment Manager on the management of the portfolio
of assets within the Company. At each Board meeting the
Board monitors the investment performance of the Company
in comparison to its stated objective. The Board also reviews
the Company’s activities since the last Board meeting to
ensure that the Investment Manager adheres to the agreed
investment policy and approved investment guidelines
and, if necessary will approve changes to such policy and
guidelines. In addition, at each Board meeting, the Board
receives reports from the Secretary in respect of compliance
matters and duties performed on behalf of the Company.
By their nature these procedures can provide reasonable,
but not absolute, assurance against material misstatement
or loss.
The Board has reviewed the need for an internal audit
function. The Board has decided that the systems and
procedures employed by the Investment Manager and
the Secretary and the work carried out by the Company’s
external auditors, provide sufficient assurance that a sound
system of internal control, which safeguards the Company’s
assets, is maintained. An internal audit function specific to
the Company is therefore considered unnecessary.
Relations with Shareholders
The Company welcomes the views of shareholders
and places great importance on communication with its
shareholders. The Board receives regular reports on the
views of shareholders and the Chairman and other Directors
are available to meet shareholders if required. Any requests
for meetings should be made to the Administrator.
Directors’ Authority to Buy Back Shares
The Company did not purchase any shares for cancellation
during the year.
The Directors will seek renewal of the current authority of the
Company to make market purchases of up to 14.99 per cent
of the issued Ordinary Share Capital and Special Resolution
1, as set out in the notice of the Annual General Meeting,
seeks renewal of such authority until the earlier of the Annual
General Meeting in 2009 and 22 August 2009. Any buy back
of Ordinary Shares will be made subject to Guernsey law and
within any guidelines established from time to time by the
Board (which will take into account the income and cash flow
requirements of the Company). The making and timing of any
buy backs will be at the absolute discretion of the Board.
Purchases of Ordinary Shares will only be made through the
market for cash at prices below the prevailing net asset value
of the Ordinary Shares (as last calculated) where the Directors
believe such purchases will enhance shareholder value. The
purchases will only be made in accordance with the rules of
the UK Listing Authority. The price to be paid must not be
more than five per cent above the average market value of
the Shares for the five business days prior to the day the
purchase is made.
It is intended that buy backs will only be made if doing so will
represent an attractive investment opportunity for ongoing
shareholders not participating in any such buy backs.
Accordingly, purchases of Ordinary Shares will only be made
through the market for cash at prices below the prevailing
Net Asset Value per Ordinary Share of the remaining Shares.
Auditors
KPMG Channel Islands Limited have expressed their
willingness to continue in office as auditors and a resolution
proposing their re-appointment will be submitted at the
Annual General Meeting.
Approved by the Board on 8 March 2008.
Jonathan Gamble Helen Green
Director Director